Texas Insurance Test

Which of the following cannot be used in underwriting for a disability insurance policy?

marital status and occupation

Does an annuity required evidence of insurability?

no

Immediate annuity

no accumulation period and is used to generate immediate income within a year of issue date

National Association of Insurance Commissioners

no legal authority; promotes state uniformity

Unilateral Contract

one party is legally bound to contractual obligations (usually the insurer)

An absolute assignment can be described as?

one way transfer

Domestic Insurer

organized under the laws of the resident state

Separate Account

owner can select which sub-accounts; cv will fluctuate based on markets conditions

An annuity consist of a...

owner, annuitant and beneficiary

The required uniform provision which states the policyowner may adjust the beneficiary, premium mode and coverages is found in:

owners rights

Conditional Receipt

provides that coverage is effective as of the date of application or date of completion of any required medical exam

B has been receiving disability payments up to until two months ago when he went back to work. Today B's injury has surfaced again, which provision of disability will apply?

recurrent disability

If a policy lapses, what may an insured do to start the policy back up?

reinstate

An agent may not do any of the following except:

replace a policy

Under the Entire Contract provision in regards to an in force policy. When the insurer wishes to change items in the contract, what will most likely occur?

the policy may not be changed

Which of the following is not a required provision in life insurance policies?

extended term

Which of the following is NOT true about health savings account funds?

funds do not roll over next year (the do roll over up to the age 65)

Which type of annuity is most likely to be purchased with lump sum?

immediate annuity

Where can the insured find the benefits and perils listed in a policy?

insuring clause

Which of the following is true about a noncontributory disability insurance plan?

medical underwriting is not required

An employee has group life insurance through her employer. After five years, she decides to leave the company and work independently. How can she obtain an individual policy?

she can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group

A woman is ready to retire and has 100,000 in savings. She would like to begin receiving immediate payments that are guaranteed for life. Which annuity would she purchase?

single premium

N paid for his Long Term Disability policy with a lump sum in 2006. In 2008, N died, which of the following most likely occurred?

unearned premiums are returned

Under a group life conversion, the death benefit may be reduced to a minimum of what amount?

$10,000

An insured has a $20,000 Whole Life with a double indemnity Accidental Death and Dismemberment policy. The insured purchased the policy in 2001 and commits suicide due to an overdose of pain medication in 2009. Which of the following will be paid to the insured family?

$20,000

An insured has a flat deductible of $100 and coinsurance of 80/20 on a major medical policy. What amount would the insured be responsible for on a $2,000 claim?

$480

The commissioner of insurance must schedule a hearing within how many days of an agent responding to a cease and desist order?

10 days

A person has a 200 deductible with 80/20 coinsurance. They then have a claim of 1,500. What is the maximum amount the insured will pay for his claim?

460

How many years must a producer list their past residences on a an application for a license?

5 years

A policy that may cover all of the passengers on an airliner would be known as:

Blanket Accident

Which type of settlement option does period-certain apply to?

Life Income

The type of insurance policy contingent upon being ineligible to complete 2 Activities of Daily Living (ADL's) is known as:

Long Term Care

What can a person purchase to cover the costs Medicare does not?

Medicare Supplement

An outline of coverage is required to be given during the sales process of which policies?

Medicare Supplement or LTC

L had filed an insurance claim on March 1st for the injuries she sustained at home while preparing a meal for her family. The insurer has been conducting an investigation under the Time Payment of Claims clause, and on June 1st they deny the claim without giving her a reason. Which would L use as the basis of her Legal Action against the insurer?

Unfair Claims Settlement Practices

Which of the following statement is true about a Long Term Care policy?

a hospitalization is usually required before benefits can begin

In regards to having a minor as a beneficiary, which of the following would determine how the benefits of an Endowment contract would be paid upon the death of a parents (insured) death?

a legal guardian would be appointed of a legal guardian designation was listed on the policy and they would be in charge of the funds

The transfer of ownership of a policy completed by the policyowner is best described under which term?

assignment

An insured completes an application and the producer submits it to underwriting. The underwriter issues the policy. What is still needed for this to become a legal contract?

consideration/premium

Which of the following best describes a term policy exchanged for whole life?

convertible

Which of the following must be included in an insurer's advertisement?

corporation name

All of the following are TRUE about Adjustable Life EXCEPT:

death benefits may be increased without proving insurability

Which type of annuity is most likely used for qualified retirement plans?

deferred annuity

The change of beneficiary form may only be amended by whome?

the policyowner

Who can request changes in premium payments, face value, loans, and policy plans?

the policyowner

In which of the following scenarios would the insurer cancel a medical policy?

the premium was not paid

Under the Uniform Provisions developed by the National Association of Insurance Commissioners (NAIC), after the insurer receives notice of claim, how long does the insurer have to furnish documents to the insured for reporting?

15 days

A general lines license must be renewed after how manny years in order to remain active?

2 years

J has an Accidental Death and Dismemberment policy in the amount of $100,000 with his mother as his primary beneficiary. J is involved in a car accident and dies, 2 months later J's mother dies. How was the death benefit paid?

J's mother received the death benefit

What is not a Whole Life Policy?

Joint Life

An HR-10 plan is commonly known as which plan?

Keogh (Unincorporated)

What must be given at the time of application for a Long Term Care policy?

Outline of Coverage

Which of the following riders will waive the insureds premium until a child reaches a certain age?

Payor Benefit

All of the following are discussed in the Insuring Clause:

Perils, insured, and coverages

Which of the following best describes split-dollar insurance?

When the premiums are split among employer and employee (typically when an employer and employee share life insurance premiums)

What procedure must the insurer follow due to the Fair Credit Reporting Act if they would like to request information about a potential insured's Hobbies, Habits and Reputation?

create a way to correct potential inaccuracies

Which of the following is NOT a duty of the commissioner of insurance:

active claims reserves

When may an indexed product switch to a different index?

at the end of the year/index term

Medicare is designed for which of the following populations?

citizens over age 65 in the US

The insured paid for the premium upfront, but the underwriter rated up the policy. When the agent delivers the policy, what must the agent do?

collect more premium and an amended application

In Texas, the term transacting business from the procedures standpoint includes which?

collecting premiums

J and his wife insure each other under two separate major medical policies. Which provisions determine the plan that pays first during a claim?

coordination of benefits

All of the following are considered transacting insurance EXCEPT:

discussing mutual funds

A Certificate of Coverage is required to have which of the following?

effective dates

Which of the following terms beset describes the word non-contributory?

employer will pay full premiums

Which provision states that an insured may NOT change a beneficiary?

entire contract (policyowner may request a change but only the insurer may make the change)

An insured submits an application with the premium but has left portions but has left portions of the application unfilled. What will happen if the insured dies during underwriting?

no benefits are paid and premiums are refunded

W has landed a new job with much higher pay; unfortunately her new employer does not provide any insurance benefits except for Workers Compensation. W would like to purchase a disability income policy, which would be best suited for her?

non-occupational

Medicaid provides for Long Term Care in which situation?

financial or indigent needy persons

Free look period for life insurance

10 days

All of the following may charge a fee in regards to insurance, EXCEPT:

managing general agent

Option B

greater death benefit

Foreign Insurer

An insurance company that is incorporated in another state.

Alien Insurer

An insurance company that is incorporated outside the United States.

Collateral Assignment

Assignment of part of the proceeds of an insurance policy to a bank as collateral to settle the loan balance that may exist at the insured's death.

What are the different types of annuities?

Fixed and Variable

K has a life insurance policy with H and L named as beneficiaries. L dies young at age 18 and H died in a car accident. 2 months later when K dies, under the common disaster clause, who will receive the benefits?

K's estate

Stranger-Originated Life Insurance (STOLI)

Life insurance arrangement in which a person with no relationship to the insured purchases a life policy on the insured's life with the intent of selling the policy to an investor and profiting financially when the insured dies.

What are the different types of Whole Life Insurance?

Ordinary, Universal, Indexed, Variable, Variable Universal

W and S purchase a buy sell agreement of their company, and names himself as beneficiary. The company becomes insolvent two months later and W dies. Even though there is no insurable interest, how will the benefits be payed?

S receives the full benefits (there was an insurable interest AT THE TIME OF APPLICATION)

The type of retirement account that a sole proprietor may establish that requires all employees to receive the same benefit is:

Simplified Employee Pension Plan (SEP)

Y is 45 years old and has a large sum of money from a court settlement. Y would like to structure the settlement to receive income payments until he is eligible for Social Security, which type of product would be bet suited for Y?

Single Premium Immediate Annuity with a Fixed Period

A person lives in a different state than they work in. When they purchase insurance through the marketplace, which one should they utilize?

The state they live in

N and M are identical twins with the same jobs. When N applied for health insurance, his premium was set at $200. M applied for the same health plan but was charged a higher rate for $300 which insurer based the up-charge on M's single marital status where N was married. What is the insurer guilty of?

Unfair Trade Practices

What is permanent life insurance?

Whole Life

Taxes are deferred during what period of an annuity?

accumulation period (only found with deferred annuities)

Aleatory contract

based on uncertain event; likely that there will be unequal exchange of consideration by either party

Medicare is BEST described as:

basic hosipital and medical coverage

Conditional contract

both parties must perform certain duties to make the contract enforceable

Term insurance does not offer...

cash value or living benefits

Variable Life

certain benefits based on the markets conditions; has a general account and separate account

A contributory disability policy that is written as guaranteed renewable may not be canceled in all of the following scenarios except:

failure to pay premiums on timely basis

Nontraditional Whole Life

insurance company can change the premiums of interest rates based on money market rates

Universal Life

insurance protection and cash value that grows on tax deferred basis

Variable Universal

investment component; flexible premiums and adjustable death benefits; option A and B; cv is in separate account...

Which of the following policies may be used to circumvent the insurable interest clause of a life insurance contract?

investor originated life insurance

Which of the following MUST NOT sign an application for insurance?

irrevocable beneficiary

Which of the following statements is true about Medicaid?

it is regulated by federal and state government

Which of the following is TRUE about guaranteed renewability policies?

it may only be canceled due to nonpayment

Option A

larger cash value accumulations while purchasing

What would be the consideration of an insured in an issuance contract?

pay the first months premium

Deferred annuity

pays periodic benefits starting at some specified time in the future (ideal for retirement fund)

Who is the Affordable Care Acts marketplace designed for?

people not eligible for employer coverage

Premiums under the Affordable Care Act are based off of:

per person

A basic cancer policy will cover all of the following except:

physical therapy

What is not considered insurance fraud?

placing a customer with surplus lines

Under a group voluntary long term care plan, which of the following statements is considered to be the most accurate?

premiums will likely be lower than that of individual policy

Medicare Part D covers which of the following?

prescription drugs

An annuity...

primarily privde a steady stream of income to an individual typically upon retirement

The application is the...

primary source of information

Which of the following is NOT a description of the Commissioner of Insurance?

private prosecutor of insurance fraud

Life Insurance...

provides a benefit upon death of the insured

Ordinary Whole Life

provides protection to age 100, cash value accumulation to age 100 and fixed level premium payments

Accidental Death and Dismemberment will pay no benefits in which scenario?

self-inflicted injuries

All of the following are illegal except:

selling insurance through surplus lines

What would be added to a policy that can cover high risk hobbies?

specialized risk

The incontestability clause cannot void a contract within the first two years to which scenario?

statements made that are true to the bet of the applicant's knowledge

P has an employer paid for Disability Income policy. When P receives $2,000 from the policy what are the taxation consequences?

the 2,000 is taxable to P

Which of the following would best a 65-To-Term-Modified-Whole-Life policy?

the benefits are tax free upon endowment (all life insurance benefits are tax-free)

W and R are married and have each other added as dependents on their policies. What will be used to determine which plan pays for W?

the birthday that comes first in the year (birthday rule)

XYZ employer offers a contributory group life plan for their employees for which XYZ pays $90,000 in premiums. Which statement is tru about this contributory plan?

the death benefit is received tax free

Which of the following is correct assertion about the waiver of premium rider?

the insurance company will pay premiums after a short probationary period

Viatical Settlement

the sale of a life insurance policy by a terminally ill insured to another party, typically to investors or investor groups, who hope to profit by the insured's early death

An applicant must sign and application for insurance for which purpose?

to attest the answers are the reasonable best of their knowledge and are considered representations

Policy replacement is so strictly regulated for which purpose?

to protect the purchasers of life insurance and annuity products

In this state, all medical insurance policies are required to provide for drug and alcohol abuse coverage. All of these policies include the following provisions, EXCEPT:

transportation to and from a treatment center

All of the following are important regarding life insurance survivorship determination EXCEPT:

unemployment rates

How long are agent appointments in force between an agent and an insurer?

until they are terminated

An applicant purchases insurance but does not pay the premium. The agent tries to deliver the policy, but the insured is not home. On April 21st, the agent hand delivers the policy and collects the premium. When is the coverage effective?

upon issuance

A policy with flexible premiums and cash value with an investment component is known as:

variable universal life

Which of the following is a literal true statement backed with a guarantee?

warranty

When would an autopsy not be completed and paid for by an insurer?

when prohibited by state law